Unemployment Insurance Fraud in California

Unemployment insurance is federal and state insurance program where employer’s taxes fund the program designed to help those individuals that lose their job through no fault of their own. Depending upon their personal circumstances, individuals covered under the program can receive between $40 and $450 a week.

The following are the requisites to be qualified for unemployment benefits:

• Be unemployed. The individual covered must file a claim when no longer employed or if the hours of work were involuntarily reduced to less than full-time employment;
• Currently in search for employment;
• Be ready and physically able to work immediately;
• Was gainfully employed in the last eighteen (18) months;

Eligibility though still remains on a case to case basis as the current guidelines allow those who have quit or were fired to be eligible.

Under the law, unemployment insurance fraud is committed when an individual willfully makes false representations, concealment of a material fact or false identification to obtain, increase, reduce or defeat any benefit under the state or federal programs. This fraud is covered under the California Unemployment Insurance Code and the California Penal Code.

The following are common examples of unemployment insurance fraud:

• Being employed while collecting unemployment insurance and not reporting such employment to the California Employment Development Department;
• Collecting other types of compensation, such as pension, workers’ compensation benefits without reporting that compensation to the EDD;
• Using a false name, social security number or employment information while working and simultaneously receiving unemployment benefits;
• Living in California and trying or obtaining fraudulent benefits in another state;
• Creation of a fictitious employer and listing the accused as an employee who is eligible to receive unemployment benefits;
• Cashing someone else’s unemployment check without the proper authorization;
• Fabrication of work-search efforts;
• Falsification of the reason for unemployment;

Employers are also liable under this law and the following are the violations committed as unemployment insurance fraud:

• Intentionally providing false information as to the reason for the termination of employment and salaries to avoid contributions to the unemployment insurance program;
• Knowingly withholding deductions from employees and willful non-payment of these deductions to the proper agency;

This crime is called a “wobbler” as it can be prosecuted as either a felony or misdemeanor, depending upon the facts of the case and the criminal history of the accused. The following are the offenses and the imposable penalties:

• Sec 2101 of the Unemployment Insurance Code – For a misdemeanor offense, the imposable penalty is up to one (1) year in county jail and payment of a fine of up to $20,000. For a felony offense, the imposable penalty would be between sixteen (16) and thirty six (36) months in state prison and payment of a fine of up to $20,000;
• Sec 550 of the California Penal Code or General Insurance Fraud – Depending on the amount, the case can be prosecuted either as a felony or misdemeanor. If the amount is less than $950, then the crime is a misdemeanor and the imposable penalty would be six (6) months in county prison and payment of a fine of $1,000. If above $950, then the jail time would be one (1) year in prison and payment of a fine of up to $10,000. If the crime charged is a felony, when the proceeds are above $950 in any twelve (12) month period, the imposable penalty can be up to five (5) years in state prison and payment of either a $50,000 fine or double the amount of the fraud, whichever is higher;
• The accessory penalties would include suspension or revocation of any professional license as this is a crime involving moral turpitude, ineligibility to receive future benefits and repayment of defrauded benefits plus a 30% penalty;

The crime of unemployment insurance fraud is a serious matter in California. Should you be or know anyone facing any of these charges, do reach out to the lawyers at the Law Offices of Ramiro J. Lluis for a free consultation today.